Creating Shared Value

13/01/2016

banner-creating-shared-value

The concept of ‘Creating Shared Value’ (CSV) was first defined in the Harvard Business Review article “Creating Shared Value” by Professor Michael Porter and Mark Kramer in 2011. The authors identified that shared value is a management strategy used by organisations to create measurable business value by identifying and addressing social issues that may arise and could intersect with business.

CSV is an approach used by companies to develop the future market and strengthen economies and communities. Creating shared value is a new way for businesses to thrive and grow profits while benefiting the community which it operates in.

Ramana James, Head of Group Shared Value at Insurance Group Australia explained;

“There is such a movement and momentum around shared value as a concept, I think you will start to see more specific roles being created which are closely linked to the strategy. Existing corporate sustainability roles are also being asked to think about shared value and are being more closely aligned to commercial success.”

The Difference Between CSR and CSV

The term Creating Shared Value (CSV) can run the risk of being mistaken for the well known phrase Corporate Social Responsibility (CSR). However, Creating Shared Value in fact turns the concept of CSR on its head as maximising profit is seen as a key element, despite it still very much focusing on addressing social and environmental concerns.

Cynics often view CSR as a cost, rather than a profit generator, whereas Creating Shared Value is revolved around adopting responsibility in order to create business opportunities and value. Crucially, the aim of Creating Shared Value is that it’s integrated into management strategy. Conversely, CSR is often seen as an ‘initiative’ or ‘add on’ rather than a permanent or integrated feature of the organisation.

Management behaviour surrounding the social impact of business is incessantly changing, and the fundamentals of CSR activities that were in place 5 years ago are now dated. This is where the new CSV framework is beneficial to organisations of any size.

Who is Creating Shared Value?

Major companies, including Nestlé, have started approaching business using the CSV framework by creating 398 commitments (to be met by 2020) to support the long-term goal; including nutrition, rural development, water, environment, human rights and people. As a global leader in business, Nestlé don’t just have a duty to operate responsibly, but also to create positive value for society.

Nestlé’s ambition is be the “leading nutrition, health and wellness company” which is at the heart of creating shared value, and is underpinned by a duty to protect natural resources for the future. The company explain that “finding better ways to collaborate and secure collective action is key to addressing society’s most critical challenges and maximising the shared value we can create.”

How to Create Shared Value

Porter and Kramer suggested that shared value could be created in three ways:

  • Re-conceiving products and markets: Develop profitable products and services to meet needs / fulfil social issues with the aim to rectify these conditions.
  • Redefining productivity in the value chain: Identify and successfully address any social and environmental constraints in the industry while increasing the productivity of the company and its suppliers.
  • Developing supportive industry clusters: Increase growth and productivity by strengthening competitive context of the business in the regions in which the company operates

An example of a small businesses successfully creating shared value is ‘Travelsphere’. The mainstream travel company branched out to offer a specialised holiday service to partially-sighted and blind people. This has generated more than £100,000 in sales since launch, and has opened a completely new market to the organisation by providing such a specialist service. As a result, it has secured repeat business and has beaten competitors to a new niche in the market.

ISO 14001 can help you…

ISO 14001 is of course a great example of Creating Shared Value, as you become a greener company and putting yourselves in a better position for tenders, while setting you apart from competitors. The internationally recognised standard will help you save money as you adopt reduce, reuse and recycle principles.

ISO 14001:2015: The world’s most recognised ‘green standard’ has recently been updated. As with CSV, it encourages greater leadership involvement and integration into management strategy.


If you would like to find out more about formally implementing these values into your business, please get in touch with our award winning team by dialling 0800 7007 404 or completing an online enquiry form.